Airbnb settles suit with Boston over short-term rental limits

Airbnb has agreed to settle its lawsuit with Boston over a new short-term rental law, a deal that will pave the way for strict new limits aimed at preserving the city’s housing stock during a time of spiraling real estate costs.

The settlement announced Thursday will allow Boston to restrict the short-term rental of units to owner-occupants or landlords of small properties who live in their buildings, and prohibit listings by investors or absentee landlords, effectively preventing those units from disappearing from the city’s housing rolls.

Under the agreement, Airbnb hosts will have to register with the city by December, the city said in a statement, after the rental giant agreed to drop its opposition.Airbnb also agreed to display a registration number on its listings and it will share with the city information on hosts that will allow regulators to determine if the listing is allowed under the new rules.

The Boston law is one of the tougher measures in the country, and comes amid efforts by a number of cities and states seeking to regulate Airbnb.

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The new law went into effect Jan. 1, but the city agreed to hold off on some aspects while the suit by Airbnb proceeded. Now, though, hosts who have not registered by Dec. 1, or who are not qualified to rent out units, will be removed by Airbnb from the company platform.

Mayor Martin J. Walsh said he has sought “a fair balance between preserving housing and allowing Bostonians to benefit from this new industry.”

City Councilor Michelle Wu, who helped usher in the council’s passage of the city ordinance, praised the settlement.

“Boston has set an example for city governments across the country, who are empowered to set their own reasonable regulations,” she said.

In addition to investors and absentee landlords, rental tenants also will not be allowed to rent out units for short periods. Generally, only owners of individual units or landlords with a secondary unit in their own two-or-three-unit building will be allowed to list them for short-term rental. The landlord must occupy the dwelling for at least nine months out of the year.

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Last year, Airbnb had about 6,300 listings in Boston, and studies have suggested that much of its business comes from investors and absentee landlords — the targets of the city’s ordinance.

The explosion in popularity of rental services such as Airbnb has put on a strain on the housing stock in many cities with very high real estate costs.

A University of Massachusetts Boston study in 2016 found a small but notable increase in rent prices due to increases in Airbnb listings, a conclusion that was confirmed by other national studies. As Boston faces spiraling housing costs, one of the city’s challenges has been preserving the affordable housing that already exists.

New York, San Francisco, and Los Angeles have sought to restrict the type of units that can be listed on such sites, and passed regulations requiring Airbnb to provide them with more information on its hosts.

Separately, Massachusetts passed a new state law that requires short-term hosts to register and pay taxes on their rentals. That law went into effect in July.

Initially, Airbnb’s opposition to the city law was based on concerns that the company would be forced to turn over private information about its users, but those concerns were allayed under the agreement.

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Beginning Sept. 1, Airbnb’s website will include a function allowing hosts to enter and display their required city registration number. All hosts of qualified short-term rentals have until Dec. 1 to obtain and display the city registration number on their listings.

“Our goal has always been to work with the city to find a path forward for home sharing in Boston,” said Liz DeBold Fusco, an Airbnb spokeswoman. “With this settlement agreement, that is what we have collectively achieved, establishing an effective regulatory framework for compliance.”

Under the agreement, Airbnb agreed to essentially open its vault for city inspection, and remove unqualified rentals. The platform would still face a $300 per unit fine for not complying.

Airbnb will also inform users of the city’s new rental standards, and will provide monthly data reports to the city including the users’ registration number, listing information and ZIP code. Those who do not provide accurate or sufficient information have 30 days to comply, or will be removed by Airbnb from its website.

City officials say the registration portal will also allow them to monitor rentals for health and code violations. Short-term rental operators must notify an abutter of a rental unit within 30 days of registering.

Dion Irish, Boston’s head of inspectional services, said the agreement strengthens the city’s ordinance by making Airbnb a partner. He hopes other industry platforms will follow the company’s lead.

“They recognize that the way to successfully do business is to work with cities that aren’t averse to short-term rentals, but want to minimize the impact they have on cities,” Irish said. “The best way for them to proceed is for them to work along with the city.”

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Last year, Airbnb company settled a lawsuit against San Francisco over steep fines the company was liable for due to unregistered hosts, agreeing to collect host data and turn it over to the city for enforcement. The company’s listings there fell by roughly half when the law took effect earlier this year, according to the San Francisco Chronicle. Airbnb has sued New York City over a new law that is similar to Boston’s. That case is pending.